In an attempt to regain shareholder confidence, Citigroup Inc. (C) announced changes to their board of directors.
The moves were announced by Citigroup chairman Richard Parsons who began the turnover of the financial giant’s board last year to address what many saw as a culture too willing to overlook the risks as the company piled assets on its balance sheet during the credit-market bubble.
The headline move brings former Mexican President Ernesto Zedillo to the financial giant’s board. Zedillo has previous experience at Mexico’s central bank and is on the boards of Alcoa, Inc. and Procter & Gamble Co.
Both moves suggest that Latin America, which has been a bright spot for the company, is having growing influence on day-to-day operations.
Parsons says the addition of Zedillo would help the company “build on its unmatched global strengths.” Citigroup does business in 140 countries.
Eleanor Boxham, president of Corporate Governance Alliance in Columbus, Ohio, said of Mr. Zedillo, “(He would) emphasize their global footprint” and add “fresh eyes” without ties “to past ways of doing things.” The latter two comments were undoubtedly a swipe at a board that was seen as too large and too entrenched to be effective.
When the moves take effect in April, the size of the board will shrink from 17 to 15.
Departing the board will be Michael Armstrong, former chief executive of AT&T Corp. and the longest-serving Citigroup director, who has been informed his name will not come up for re-election at the bank’s next shareholder meeting.
In a statement, Mr. Armstrong said his decision to leave the board was based on “bringing in excellent new board members, the financial strength of the company, and my judgment (that) the board should now be smaller.”
Also leaving the board are Anne Mulcahy, chairman of Xerox Corp., and John Deutch, a professor at Massachusetts Institute of Technology.
The three departing directors had more than 40 years of experience on the Citigroup board.
Among the new hires Parsons has brought to the board are two seasoned bankers and a private-equity investor. Still many analysts are critical of the latest moves, claiming that the turnover has still not addressed a lack of hands-on experience at financial companies.
Christopher Whalen, co-founder of Institutional Risk Analytics, said the company needs “to find people who have real operational and financial skills to sit on this board [instead of] politicians.”
